EE eee
Log export issue
puts U.S. lumber duty

case at risk

by Doug Smyth,
Research Director, IWA-CANADA

In May, 1992 the U.S. Commerce
Department determined that all
Canadian lumber imports into the
United States were subsidized by an
amount equal to 6.51 percent of the
mill selling price. The lion’s share of
the 6.51 percent is accounted for by
the Commerce Department’s theory
that British Columbia’s log export
restrictions constitute a form of sub-
sidy for our sawmills because they
exert downward pressure on provin-
cial log prices. In order to prevent
B.C. mills from gaining an unfair
advantage in the U.S. market, the
Department assessed a 4.65 percent
log export subsidy duty on British
Columbia lumber exports to the
U.S.A.

Most people do not realize that, as a
result of an administrative review
process now underway, the U.S.
Commerce Department can dramati-
cally increase the current duty rate,
and apply it retroactively to May,
1992. Such a development would have
a devastating impact on production
and jobs in the industry.

Two months ago University of B.C.
forestry professor Peter Pearse gave
strong aid and comfort to the U.S.
industry Coalition opposing Canadian
lumber imports by saying that B.C. log
export restrictions reduce the value of
our timber resource and stimulate
wasteful use of timber.

Mr. Pearse’s view is totally
unfounded. A major federal study by
myself shows that the B.C. sawmilling
industry is in fact by far the most effi-
cient in North America. Far from
being wasteful, the introduction of
modern technology has permitted the
Interior industry to achieve dramatic
improvements in lumber recovery.
Given its substantially greater utiliza-
tion of available fiber, the B.C. indus-
try can hardly be characterized as
“wasteful.”

Mr. Pearse says “...the recovery of
lumber and other products from logs
is lower in B.C.’s coastal mills than in
the mills ag the border in
Washington where log prices are high-
er.” But my study shows that deliv-
ered log costs to the most efficient

B.C. Coast mills were roughly two and
one-half times greater than for compa-
rable U.S. Pacific Northwest opera-
tors during the late 1980’s. Our coastal
industry could afford high-cost logs
only by concentrating on offshore
markets for value-added lumber prod-
ucts. Between 1987 and 1990 B.C.
overseas lumber shipments jumped 20
percent, as most companies shifted
away from making dimension lumber
for the U.S. to high value-added prod-
ucts.

Mr. Pearse’s initial suggestions
regarding opening the U.S.-Canada
border to log exports in both direc-
tions are politically naive. First, the
U.S. environmental movement has
succeeded in shutting down indefi-
nitely timber sales from federal lands
in the U.S. Pacific Northwest. No B.C.
sawmill could compete for what is
now and will in future be a negligible
supply of public timber on the U.S.
side. Second, the U.S. trade-union
movement, the states and most inde-
pendent sawmillers have publicly stat-
ed that they will not agree to lift the
ban on exports of public timber.

Mr. Pearse then says the Orient is
the big potential market for Canadian
logs. He fails to understand that dur-
ing the 1980’s the Far Eastern log
importers enjoyed a dramatic curren-
cy-exchange advantage, as the value
of the U.S. dollar fell sharply against
that of offshore currencies.

The Japanese have been able to
take advantage of such currency
swings to buy large volumes of
unprocessed timber. As a result, log
exports from Oregon and Washington
soared to record levels by the end of
the 1980’s. But since Canadian and
U.S. sawmills have no control over
large currency exchange fluctuations,
it would be totally unreasonable to
suggest that whole communities
should be decimated by log exporters.

Mr. Pearse grossly misrepresents
the job loss impact of shifting from
domestic manufacture to log export-
ing. He makes the preposterous asser-
tion that the direct employment
involved in running logs through
sawmills is no greater than the jobs
created in exporting them. However,
it takes the same 1.5 logging jobs per

decision is

Gerry Stoney told compromise supporters that
in grass roots democracy.

thousand board feet of lumber to
deliver the log to the mill or export
dock. One more job is required to
move those logs onto the ship. In con-
trast, another seven jobs are neces-
sary to carry out domestic lumber
production and remanufacturing, but
excluding pulp employment from
byproduct chips.

Given the 20 percent reductions in
the allowable annual cuts which the
provincial government has announced
for the next few years, B.C. sawmills
already face severe timber shortages.
Opening up log exports will dramati-
cally increase the risk of losing manu-
facturing jobs in the B.C. forest prod-
ucts industry. Incredibly, Mr. Pearse
would now have us multiply that risk
by granting unrestricted U.S. access
to B.C. logs, even if the U.S. maintains
its ban on public timber exports. He
justifies this position by asserting that
in the past B.C. log export controls
caused natural resources to be wasted
in order “to promote special inter-
ests.” However, as the owners of 90
percent of the forest resource, B.C.
taxpayers have the right to maximum
benefits from public timber sales,
including well-paying jobs, communi-
ty stability, and a good healthcare sys-
tem. Mr. Pearse grossly underesti-
mates the great strides that have been
made in manufacturing value-added
lumber, which generates more jobs.
Therein lies the future—not in the

“special interests” of a small group of
Jog exporters.

Other Canadian provinces have also
imposed controls on raw log exports.
At the turn of the century, Ontario
approved legislation that all logs cut
on Crown lands should be manufac-
tured in the province.

It is important that WA members
strongly support B.C. log export con-
trols. Because of the high risks posed
by the “in-and-out” predatory practis-
es of offshore log exporters and the
U.S. Commerce Department’s lumber
duty decision, British Columbians and
Canadians must stand squarely behind
the current policy. Although the
Canada-U.S. Free Trade Agreement
permits both countries to control log
exports, assessing a duty to offset the
alleged subsidy to Canadian lumber
conferred by export restrictions in
reality interferes with that right. Such
a duty can be used as a lever to force
B.C. and other Canadian provinces to
drop those controls. It is important
that we not give in to that pressure,
particularly since the United States
has greatly tightened their restrictions
and Southeast Asian nations have
embargoed such exports in recent
years.

Adapted from articles by Doug
Smyth and Les Reed, U.B.C. emeritus
professor, in Madison’s Canadian
Lumber Reporter and The Globe
and Mail.

Clayoquot rally

Continued from page one

dent Gerry Stoney who said the get-
together is proof that people are con-
cerned about trying to keep their fam-
ilies and communities together.

“If we hold together, if we stand up
and tell the truth, then this gathering
today will be the turning point in the
land-use debate in British Columbia,”
said Brother Stoney.

Stoney said that the public is being
lied to by leading preservationists
because they say the Clayoquot com-
promise is a pro-logging decision
when 400 IWA members are losing
their jobs because of it.

The compromise decision reduces
the annual allowable cut by one third
and sets aside vast areas for park-
lands.

Stoney called the Clayoquot deci-
sion, which took four and a half years
to make an exercise in grass roots
democracy.

Dave Haggard, who represented the
IWA’s interests at the table during dis-
cussions on sustainable development
in the Clayoquot Sound told the
crowd that their rendezvous was a
large success and that it shows that

Photo by Susan Anderson

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¢ Port Alberni Local 1-85 President Dave Haggard told rally that their showing
was more significant than Clayoquot blockaders.

ordinary B.C. citizens need their voic-
es heard.

Brother Haggard said that the IWA
believes the decision is a compromise
which is realistic for the long term
sustainability of local communities
and the government must not back
down on the decision.

The Clayoquot rendezvous event
was an important get together for peo-
ple who are tired of being pushed
around by radical preservationists
who have played their cause to a
media which hasn’t given equal cover-
age to those who support the compro-
mise.

“The problems here have been
negotiated and worked out and solved
by ordinary people,” Brother Stoney
told the crowd. “These are people
who are trying to make a life for them-
selves and their kids, . . . people who
live here and want to stay here.”

The rally participants also heard
from a line-up of speakers which
included Share Our Resources’ Mike
Morton, Ken McRae of the
Communications, Energy and
Paperworkers Union of Canada, for-
mer IWA national president Jack
Munro, federal NDP M.P.’s Bob Skelly
and Dave Stupich, and Nick Worhaug
of the Hotel Workers’ union.

LUMBERWORKER/SEPTEMBER, 1993/7